Norway's Stolt-Nielsen believes its cost-cutting during the Covid-19 pandemic will lead to a permanent change in the way it operates.
The Oslo-listed chemical tanker and terminals owner has implemented measures that will save it $83m this year as it seeks to preserve liquidity in the face of lockdowns and disruption.
It has taken what it called “dramatic action” to delay or cancel capital expenditure and cut operating, administrative and general expenses.
Board fees were temporarily halved and senior management took a voluntary salary cut of 20% from 1 April.
Chief executive Niels Stolt-Nielsen reiterated that the goal is to retain liquidity.
“When the pandemic hit us, when we went into lockdown, we were very much focused on preserving cash, and we have taken actions and we continue to take action,” he told a conference call with analysts.
The final dividend for 2019 was cancelled, while all travel, entertainment and training was cut back, and professional fees and payments to contractors were reduced. Total savings from those actions are $21m so far.
“In addition, we reviewed all the capex [capital expenditure] in each of the businesses, and we identified $62m, which we can either cancel or delay,” he added.
Looking ahead, he said: “On the permanent savings, I would say, as you know, working from home works. We are, of course, keeping an eye on productivity, but working from home works.
Less office space
“So, going forward, with the systems, with the technology and all the things that we’ve done, there are savings. There are permanent savings that we can achieve.”
Niels Stolt-Nielsen also said the company would need less office space in the future.
“I think that we can’t continue to have low [levels of] travelling [but] we will never go back to the same sort of travelling that we did.
“We find out that having these Teams meetings works very well. So it will be a difference, but it’s too early to identify. But it’s very much in our focus to create permanent savings from the experience that we’ve had in this pandemic.”
Neils Stolt-Nielsen said the company has had a recruiting freeze, but it cannot continue to avoid hiring.
“So even if people retire or people leave us, we have stopped all hiring, and that can’t go on forever,” he said.
Pay will return to normal “once we feel that we are through the storm”.
The company’s net earnings in the three months to 31 May were $3m, down from $3.5m a year ago, as revenue contracted to just under $504m from $518m.
Neils Stolt-Nielsen said the financial impact of the pandemic had been “relatively modest” for the company so far, but he sees more challenges in the third quarter for the tanker fleet as the crisis continues.
